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UOB Group’s FX Strategists noted USD/JPY could slip back to the 109.00 neighbourhood in the next weeks.

Key Quotes

24-hour view: “We expected USD to ‘consolidate and trade between 109.90 and 110.55’ yesterday. USD subsequently rose to 110.55 before staging a surprisingly sharp sell-off to an overnight low of 109.65. The swift drop appears to be running ahead of itself but there is scope for the weakness in USD to test 109.55 first before stabilization can be expected. For today, the next support at 109.05 is not expected to come into the picture. On the upside, a breach of 110.15 (minor resistance is at 110.00) would indicate that the current downward pressure has eased.”

Next 1-3 weeks: “Yesterday (06 Apr, spot at 110.30), we highlighted that ‘a short-term top is in place’. We added, the ‘corrective pullback in USD has scope to move lower to 109.55’. While our view for a corrective pullback was timely, the pace of the subsequent decline was more rapid than expected (USD dropped quickly to 109.65). In view of the vastly improved downward momentum, the pullback in USD could extend to 109.05. All in, the current corrective pullback is deemed intact as long as USD does not move above 110.55 (‘strong resistance’ level was at 110.75 yesterday).”